Day 2 at TED ofcourse did not disappoint – how could I even think it would. What did surprise I think all of us (probably with the exception of Chris and the TED team) was the stark contrast between two brilliant talks. These two discussions presented a very different view of our collective future. This was the “how full is the glass session”

First up was Paul Gilding – former CEO of Greenpeace. Paul’s basic premise was that we are already beyond the point where the planet can sustain us and that in order to support the economy over the next few decades we will need 1.5x the earths resources to do so. Essentially his talk was a call to arms stating that a “crises is a terrible thing to waste” (reminded me of Rahm Emanuel comments about the economic downturn).

Paul knows what he is talking about, is a great speaker and his talk had some good facts – in summary it was depressing !

But here comes the ying to Paul’s yang. Next up was Peter Diamandis – founder of the X Prize and self titled space activist. I had known of Peter ofcourse but had never heard him speak – he is a powerful and passionate speaker. Peter view of the future was not only a full glass, but I would say an overflowing glass. He talked of abundance, he talked of all the incredible positive changes that have occurred over the years, mortality, technology, standard of living etc. His basic view was that we tend to focus on the negative because the media focuses on the negative but we have an incredible abundant future that we can shape. To be fair, he did not ignore the problems of the current like global warming, population growth etc. but be just said we will not only survive but thrive in the future.

So by this time I was feeling much better about the world and the future.

These are two very different view of the world and our collective future – I don’t think one is right, or one is wrong, though I personally gravitate towards Peter’s world view – maybe because I have more hope in humanity or maybe because it is easier to feel good about the positive scenario.

Here we go again, TED 2012 started yesterday in Long Beach. I decided this year to do a short blog post every day on the talk or conversation that most inspired me. Yesterday we had the amazing TEDFellows make their presentations. Wonderful to see these ideas being presented in such a passionate and clear way. There were many great presentations but the one that struck me most was by Ayah Bdeir – Founder of LittleBits . Essential LittleBits is concept where Lego meets engineering.

My younger daughter is a fascinated by building Lego models – but honestly there are just so many Pirates of the Caribbean ships you can build. We need to find more interesting ways in which our children can experience the joy of building new things. LittleBits create a fun, creative and powerful new way for kids to learn how to build great new products. Here is how the LittleBits team describes what they do

“Just as LEGOs™ allow you to create complex structures with very little engineering knowledge, littleBits are simple, intuitive, space-sensitive blocks that make prototyping with sophisticated electronics a matter of snapping small magnets together. Each bit has a simple, unique function (light, sound, sensors, buttons, thresholds, pulse, motors, etc), and modules snap to make larger circuits. With a growing number of available modules, LittleBits aims to move electronics from late stages of the design process to its earliest ones, and from the hands of experts, to those of artists, makers, students and designers.”

True to form the TED team included a LittleBits starter kits in our bag of goodies. Even though there were only a couple of pieces to connect I was fascinated by the simplicity of the parts and how they connected.

Here is a great video showing how to build and have fun with LittleBits. Congratulations to Ayah and her team for creating this great product.

Over my last twelve years working as a senior executive in the technology industry I have had an opportunity to engage with a broad section of technology and IT analysts and researchers – both from established firms (eg. Gartner, Forrester etc.), smaller more focused firms (eg. Altimeter Group) and of course the more recent phenomena of the blogger/independent analyst.

For the most part the people I have encountered are smart, have a good deal of domain knowledge, are good communicators and care about providing timely and accurate analysis and advice. But with all other things, there is a bell curve, there are some people that have amazing insight and I always learn from then, there are a whole bunch in the middle that are solid and sometimes can add good value and as always there are some that really should look to do something else with their time.

This post is not about the individual analysts it is about the analyst industry.

So the issue is not the people – the issue is the structure of the industry and the inherent incentives that lead to sub-optimal analysis and advice that is tainted by accusations of “pay to play”. This is a topic that is not new, and has been discussed before. The general complaint that analysts play both side of the game, they write about vendors and the industry but then also get paid by the vendors thus tainting their advice is an old one.

The reason I thought this topic was important to revisit is because (1) there have been some structural changes to the technology industry that make the current IT analyst model seem archaic and (2) I have some specific thoughts on how we might try and reform the industry.

Why Change is Even More Relevant Today: There are several important changes that have taken place in the technology industry that will require some rethinking of the traditional IT Analyst Industry.

Lack of Defined Categories: Traditionally we have had very specific functional domain experts – the CRM expert, the BI expert etc. I don’t think customers buy in categories any more – they buy solutions that transcend software category boundaries – thus making research papers focused on these categories less relevant.

Integration of Consumer & Enterprise: This is one of the bigger changes in the industry – the “consumerization of the enterprise”. Now more than ever there is no classic enterprise software play. As such, analysis and advice based on deep enterprise background, without the latest thinking on consumer sw trends (and just focusing on social media does not cut it) misses integrating a fundamental change in the industry.

The Rise of the Consumer as the Buyer: Traditional analyst work has focused on providing insight to the CIO and associated IT teams in enterprises. Analysts spend a great deal of time with vendors and CIO – but the decision makers are increasingly the end users. We still see very little end user based research at traditional analyst firms

Not Enough Focus on Start Ups: Research coverage is still based on large and medium sized vendors. This is partly due to the influence of these vendors, partly because they can afford to pay consulting fees and therefore get more attention. The reality is that startups is where the innovation happening and there is no effective model today to provide customers the timely effective insight on the innovation taking place with smaller companies.

What Can We Do – Some Suggestions: IT/Technology Analysts can play an important part in acting as sources of unbiased and informative research and analysis. Here are some suggestions for the industry to consider.

Focus on Industry Segments not SW Categories: The buyer of software is seeking the solution to a problem. These challenges arise out of specific dynamics of an industry (eg. Retail, Banking etc.). Analyst firms should build up much stronger expertise in industry knowledge to make the advice more relevant and specific.

Rate Analysts and Firms: The financial analyst industry has it partly right (notwithstanding the failure of analysis in the financial meltdown). Equity analysts provide very specific recommendations and then based on their insight and accuracy they get a rating. Top analysts and firms get paid more and have more influence – this seems the right approach. I agree that it is marginally easier to rate the accuracy of financial analysts – but I am sure the industry can come up with a standard rating system that provides customers and consumers some insight on this topic. There are plenty of examples and methods to choose from – Yahoo even has a “Analyst Performance Center” for this purpose. This would be a great business idea for an independent firm to provide analyst ratings for IT/Industry analysts – I bet customer and vendors would buy this research.

Transparency of Relationships: This will help address the “pay to play” topic. I think specific analysts and firms should clearly make transparent their economic relationship to a vendor and this information must be attached to every report and visible on the firms website. I think the preference would be to provide the dollar amount but that is probably going to far. A more radical approach to this problem – use “Buy Side” and “Sell Side” analysts. You either work with customers only to advise them on deals etc. or you work with vendors only to write on their innovations.

Stop Using IT Lingo: I have written about this in a previous blog posting “Why Words are Killing the Adoption of Innovation” Somehow we think that the more complicated the words the more insightful and important the analysis. This could not be further from the truth. The industry would be much better placed if they focused on the clarity and simplicity of the analysis. Vendors already make it impossible to understand what they are really selling – sometimes analysts add to this confusion.

Foster Independent and Small Analyst Firms: The consolidation in the analyst industry has resulted in bigger firms with more market power – this is fine, but it should be balanced with smaller and independent firms that innovate on how they are trying to bring new research and analysis to the market. Constellation Research is a new firm that is seeking to innovate in this area and I look forward to following their progress.

These are just a few suggestions for us to consider. I am sure not everyone will agree with me and I am sure my analyst friends will have a relevant point of view based on their experience – I would welcome the feedback.

Yahoo is a company that has always intrigued me. Over the past few years we have all read about the issues facing Yahoo – lack of a clear strategy, management challenges, the on again off again romance with Microsoft and a stock price that has gone from about $35 about 5 years ago to $16 today. And even todays stock price has built into it a significant value from China’s Alibaba.

Clearly Yahoo needs a growth strategy. So here is the “Right Question” Should Yahoo develop and execute on a strategy to provide a comprehensive set of services for the enterprise ? I think they should seriously explore this as an option.

Lets review what some of the current trends are in enterprise software – let me throw out some buzz words – cloud computing & SAAS, social media in the enterprise, social CRM, crowdsourcing, structured and unstructured data, Enterprise 2.0 and so on. In essence, many of the innovations in the enterprise are being driven or inspired by innovations in the consumer web. This is the core of the Enterprise 2.0 approach.

On one hand you have the pure consumer focused companies – Facebook, Google, Twitter etc. On the other hand a new generation of enterprise focused companies are extending these new approaches and seeking to integrate them into the enterprise, SocialCast, Yammer, Ning, Jive etc.

Now lets take a look at Yahoo. Despite its challenges the company is still a consumer technology leader. Some ideas – if a consumer online store – Amazon – can create the leading cloud platform for the enterprise Amazon EC2 then why cannot Yahoo leverage its data center and web management expertise to provide an enterprise cloud infrastructure and apps. Yahoo Finance is a strong product and has interesting potential to be connected with other enterprise apps to provide integrated structured and unstructured information. Yahoo knows how to build communities (maybe not as good as Facebook) but still good enough. Yahoo can be a strong player in providing social media capabilities for the enterprise. You can even consider integrating Yahoo Jobs into enterprise HR systems to provide an end 2 end business process for talent management.

I know that Yahoo has considered some of these options in the past and considered partnerships with enterprise software firms – but these plans never took off and the company focused on its consumer roots. Maybe some of these ideas are currently being discussed in the company – I hope they are.

So I don’t know if a more enterprise focused strategy (to complement the consumer work) is a viable option for Yahoo at this stage but I think it is certainly something that the Yahoo management should explore carefully – certainly if there is any truth to a private equity buyout of Yahoo this should be part of the strategy.

As usual, I appreciate your thoughts and comments – especially from current and past Yahoo employees and experts.

I recently looked up the definition of Enterprise Software in Wikipedia and saw the following description: “Enterprise software, also known as enterprise application software (EAS), is software used in organizations, such as a business or government,as opposed to software chosen by individuals.”

The first part of the definition seemed good enough. It was the second part that struck me. Enterprise software is something other than “software chosen by individuals”.

So here is the problem. Enterprise software is usually purchased by the IT department and the Office of the CIO but is used by the average business or general user. Now there are good reasons why the IT department needs to be involved, compatibility, integration, security, scalability etc. etc. etc. However the voice of the end user seems to play a much smaller role than the case should be – it is not always “software chosen by individuals”.

So this is what creates the principal – agency problem in the purchase of enterprise software. The “Principal” (the IT Department) is supposed to fully represent the interests of the “Agent” (the end user or individual) and purchase software that always fully meets the needs of the end user – this often does not happen as evidenced by frequent complaints from end users.

So how can we solve this problem – how can those who are the primary users of business software gain more power to control what software is purchased by the IT department on their behalf. Here are some logical suggestions.

1- The budget for enterprise software purchases should be controlled by the business units. This may seem like a radical suggestion (though it is tried sometimes) and has potential issues. However, I am a strong believer in the theory that those who are most impacted by a decision should own the resources that dictate that decision.

2- A software decision team of 5 should make the decision – 3 users, 1 IT & 1 Finance Representative. The number can be different but my point is that the decision should be weighted towards the voice of the end user. Now before some of you quickly point out that the end users don’t have all the knowledge or skills to make a decision – you can simply manage this by IT selecting from a list of solutions pre-approved by the end user representatives

3- Conduct a minimum 3 month pilot with at least 5% of the users. Yes I know this can be expensive, but vendors may want to consider having demo systems that can actually be used by potential users. Nothing like actually using the software to determine if it will do the job. If it is possible to have two parallel demo systems in place by competitors that is even better.

4- Have minimum user experience ratings as part of the acceptance and payment criteria. One of the challenges of non-SAAS software is that once you have purchased it you are stuck with it whether you like it or not. Having a payment schedule over a year that partially rests upon user “happiness ratings” may be a good idea. For SAAS software you could argue this is built in as you can stop paying after a couple of months if you don’t like the software.

Now before my vendor friends get upset that any or all of these suggestions will make the sales process longer and more complex I would say the following – the enterprise software industry has to finally realize that the “customer” is not a faceless corporate entity or even the IT department – it is the end/business user that will use the software on a day to day basis.

If you make the end user happy – you will sell more software – it is as simple as that.

So the “Right Question” is what can we do to ensure that the needs of end users are not only met but their wildest expectations are exceeded. This is what drives consumer software and this is what should drive enterprise software because we are selling to the same people !

It has been a couple of months since my last post – but I think I have a good reason. As many of you know I recently took on the CEO role at a company called Streetline Inc. Going into any new company takes its time and effort and hence the delayed posts. But here I am again – for better or worse !

So lets get to it. My “Right Question”. Can cities talk ? Well first what do I mean by that. I am talking about the exciting world of sensors aka “internet of things”, aka “smart grid”, aka “rfid tags” and the list goes on. Sensor are a normal part of our every day existence. We have sensors in cars, washing machines, phones, planes, elevators, machinery etc. Sensors provide a pretty basic service – they “sense”. What they sense can vary – it can be movement, temperature, magnetic level, pollution, and again the list goes on.

Over the years sensors have become more sophisticated and have had a significant impact on how we work and live. In the 1990’s a movement began called the “Internet of Things”. Started by the Auto ID Center (originally based in MIT) the idea was to create a network of objects that can talk to each other and to the internet. This concept and its offshoots have continued to gain speed. Originally there was a lot of excitement around RFID tags that could project object information and could be tracked through the supply chain, into supermarkets and even into your home. So it is clear that we are now living in a world where objects are talking to each other and to us.

However, over these past years the proliferation of sensor technology has had its ups and downs – technology challenges, adoption issues, some times privacy concerns and many times a lack of focus on creating true economic value for stakeholders. Over the last 3-5 years though there has been a resurgence of sensor based technology popping up in areas where its potential impact is massive.

One area area that has gotten a lot of attention recently is the “Smart Grid”. Essentially utility companies with the help of innovative start ups are starting to deploy sensors at electricity and gas meters, along the grid and even down to your appliances in your kitchen. The primary purpose of this investment is to generate data or information. This information can then be used by consumers, utilities and companies to manage a “smarter grid”. There are some exciting companies in this space – here are just a few you can look at for more information: Silver Spring Networks, eMeter, Tendril etc.

So now lets talk about cities – and specifically “Smart Cities”. Well first question is how does a city become a “smart city”. As usual when in doubt go to Wikipedia (I do it more so that we don’t have to waste time on definitions !)

“Smart cities can be identified (and ranked) along six main axes or dimensions.These axes are: a smart economy; smart mobility; a smart environment; smart people; smart living; and, finally, smart governance. These six axes connect with traditional regional and neoclassical theories of urban growth and development. In particular, the axes are based – respectively – on theories of regional competitiveness, transport and ICT economics, natural resources, human and social capital, quality of life, and participation of citizens in the governance of cities.

A city can be defined as ‘smart’ when investments in human and social capital and traditional (transport) and modern (ICT) communication infrastructure fuel sustainable economic development and a high quality of life, with a wise management of natural resources, through participatory governance”

That is a long and somewhat complicated definition – but does capture the essence of a “smart city”. So here is the rub. For any of the six dimensions we need one vital component – data/information. How do you know if you have smart mobility or a smart environment if you cannot measure it and gather data.

So many of the smart city activities depends on two vital components – new sources of data that inform us and software that collects this data and allows us to make smarter, quicker and more informed decisions.

There is some great information and thought leadership from IBM on this topic. I have found IBM to have the most comprehensive vision and plan around their Smart City initiatives – it leverages the use of sensors (both human and electronic), data and software to bring amazing new solutions to bear on the parts of the world that are growing the fastest and will pose the biggest challenge of our time – our cities.

So in order for a city to be smarter – it has to talk to us – it has to provide us new types of data so that we can better manage it. Let me use Streetline as a great example of a new technology that is helping cities talk to us (yes I know I am promoting my own company – but I know its technology and can talk about it in context).

Not smart parking !

Streetline is the leader in deploying ultra low power mesh sensor networks. The idea is that these mesh networks can deploy sensors that allow a city to provide amazing new sources of data and information. Our first focus area has been around smart parking. Over 3o% of the traffic in a city is caused by people looking for parking – I am sure you have personally experienced this. Streetline has developed a parking sensor that gets installed at every parking spot. Together with meter sensors we now have real time access to both parking payment information and vehicle presence information. This is just the first step – in the future we hope to deploy sensors to monitor traffic, water pressure in fire hydrants, and to keep a real time track of if street lamps are working (when you have 50,000 + street lamps the saving potential is significant). All of these sensors provide real time data that can change the way a city operates. This video by Good illustrates this concept much better than I can.

I will be writing more about this topic in the weeks ahead. We are entering a new phase of the “internet of things” where the technology is getting cheaper and better and the software (both web and mobile) is getting more sophisticated and easy to use. I predict we will see a revolution in smart city technology over the next 5-10 years.

S0 yes I do think cities can talk and they can give us amazing new types of information that will change how we work and live.

Vilfredo Pareto is one of my all time hero’s. His famous 80/20 rule has on numerous occasions saved me a lot of time and effort. It is actually quite incredible how often this simple rule that 80% of effects come from 20% of the causes shapes our thinking and our actions.

It is equally incredible how often we ignore this powerful theory and continue to hope that the results will be different if we only keep throwing resources at a problem. The reason I wanted to invoke the memory of Pareto and his famous principle was to explore its application towards the benefits we get from software solutions.

Now I am a firm believer in the benefits of software and how it can and does improve our lives, our businesses and our global economy. But here is the Right Question: At what point do additional improvements or added functionality in a software product make little or no difference in enabling a user to get his/her job done.

Let’s take MS Excel as an example. I would consider myself a moderately sophisticated user of Excel. I have been using Excel for many years especially during my time as a investment banker. Excel was first released in the mid- 1980’s so it has been around for over 25 years. There have been significant improvements in Excel since those early days in user experience, functionality, integration with other programs etc.

But here is the issue. I cannot quantify this but I am pretty sure that in my best Excel moments I do not use more than 10-15% of Excel’s vast capabilities. Yes there are probably some people who use maybe 30-40% but it is more likely that the vast majority use only a small fraction of its formidable capability.

Now let’s look at an example from the world of enterprise software – in particular CRM (Customer Relationship Management software). Now the only goal of CRM is to drive sales in a cost effective manner. There should be no other objective for deploying CRM software. If your company does not have CRM software you can certainly benefit from CRM software at the appropriate stage of scale (no a two person company does not need CRM they just need a piece of paper and a pencil !). But similar to my example of Excel, at what point do you already get the 80% benefits from CRM software ? Is it at the first purchase, is it on release no. 4, or do you ever get there ?

I don’t know the answer and many will rightly argue that “it depends”. This is always a difficult argument to win because it is a powerful argument – especially when you don’t have the courage to make a decision. But as an executive or as a technology professional we are paid to make decisions not live in a land of “it depends economics”.

So here is my assertion. The right software can play a critical role in driving growth and managing costs for any business – here I have no doubts. However, I would also argue that it is more important to have a broader and integrated technology footprint than to go deep (read deploying new versions) in any specific functional category. So, better to have an integrated suite (eg. CRM, financials, supply chain, procurement, HR, mobile workforce etc.) than to buy the version 4.0 of any specific product.

If Pareto is right – and he almost always is – we probably use only 20% of any given software application capability to generate 80% value created. Interesting thought.

I am sure many will disagree with me and I look forward to the comments and input.